Investors urge BHP to set out CEO succession plan

Investors have urged
BHP Billiton
to articulate a succession plan as chief executive
Marius Kloppers
approaches his sixth year at the helm of the world’s biggest miner.

Mr Kloppers has been in the top job for nearly five years, longer than his three predecessors in the role.

“They may well have [a succession plan] but it is just not evident to the investors out there," said
John Robinson
, the chairman of
Global Mining Investments
. “Nobody particular comes to mind. No one out there is a frontrunner."

The Australian Financial Review yesterday reported Mr Kloppers’ ratings on the highly confidential Corporate Confidence Index had displayed a deteriorating trend throughout his tenure. The results of the CCI, a survey of analysts and fund managers, are taken very seriously in boardrooms across ­Australia.

BHP has taken steps to revamp its investor relations team over the past 18 months to help improve communications to shareholders, including the accessibility of information and senior management. The team is now led by former top-rated Macquarie Equities analyst Brendan Harris.

BHP chairman
Jac Nasser
in March met with investors to gauge their views on the company’s strategy and Mr Kloppers’s performance but sources said he did not elaborate on potential successors during those meetings.

“I would expect companies to have a succession plan in place," BT Investment Management resources analyst Tim Barker said. But he added the nature of BHP’s plan was unclear to him.

A BHP spokeswoman yesterday declined to comment on succession planning.

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BHP had appointed then non-ferrous head Mr Kloppers and carbon steel materials boss Chris Lynch to the board as executive directors a year before former BHP boss Chip Goodyear flagged his departure.

From that point on both men were deemed front-runners to be named as the company’s future leader.

But since Mr Kloppers is now the only executive director, investors can only assume that one of the seven senior executives reporting to him on the group management committee would be a likely internal candidate to take his place.

“I guess the traditional way is to consider some of the senior executives that are there that run the businesses," Caledonia Investments portfolio manager Darko Kuzmanovic said. But when asked whether any stood out as top contenders, he said: “That’s a hard one."

Analysts that closely cover the stock have flagged business development head
Alberto Calderon
and non-ferrous boss
Andrew Mackenzie
as the most likely successors within the group’s management committee.

Former chief financial officer Alex Vanselow was well-regarded in the investment community but he decided to depart last year when it became apparent he was unlikely to become the company’s chief executive anytime soon.

BHP could also consider an external hire, as it did when it replaced chief executive John Prescott with American import Paul Anderson in 1998 to help drive major cultural change.

But an analyst noted that if BHP were to make an external hire, that could lead to the destabilising loss of more than one of the division heads who had hoped to be contenders for the top job.

In 2007, Mr Lynch quit the company shortly after Mr Kloppers was appointed as the new boss.

BHP’s nominations committee, which includes Mr Nasser as its chairman and fellow directors
John Buchanan
and John Schubert, is responsible for the company’s succession planning along with board appointments.